<p><span>When I joined the Board of Governors as Vice Chair for Supervision in the fall of 2017, the Federal Reserve was in the latter stages of a decade-long effort to build a new financial regulatory framework, responding to the financial crisis of 2008. Yet, although the mortar was not yet dry on that construction project—based on the blueprint created by Congress, central banks, and supervisors around the world—there was already broad recognition across the political spectrum that the framework could be improved upon, based on the experience of how it had worked over the decade of its implementation. That was the judgement of the authors of the post-crisis blueprint, former Senator Chris Dodd and former Congressman Barney Frank.</span><span> It was also the recommendation of one of my predecessors at the Fed, Dan Tarullo—a principal architect of this framework—who, in his final speech as a Fed governor, propos
<p><span>The COVID-19 pandemic and the mitigation efforts put in place to contain it delivered the most severe blow to the U.S. and global economies since the Great Depression.</span><a title="footnote 1" href="https://www.federalreserve.gov/newsevents/speech/clarida20211130a.htm#fn1"><span>1</span></a><a name="f1"></a><span> Gross domestic product (GDP) collapsed at a nearly 33 percent annual rate in the second quarter of 2020. More than 22 million jobs were lost in just the first two months of the crisis, and the unemployment rate rose from a 50-year low of 3.5 percent in February to a postwar peak of almost 15 percent in April 2020. A precipitous decline in aggregate demand pummeled the consumer price level. The resulting disruptions to economic activity significantly tightened financial conditions and impaired the flow of credit to U.S. households and businesses.</span></p>